Saturday, October 9, 2010

State fair (ch. 2): On the inside somebody is getting rich (unedited)

The Minnesota State Fair is its own little economy. The laws of supply and demand don't work the same way as they do in downtown Minneapolis.

The state fair is a perplexing, mysterious operation that most people probably don't think twice about. Who owns the land? Where does all the revenue go each year? Who runs it?

Each year the fair draws more than 1.6 million people, some years close to 1.8 million. That total is a bit mysterious, as it includes just about everyone on the grounds that day. I work at the fair nine or 10 days per year, and each day I have to have my own admission ticket. That's how it is just about everywhere. My bosses sleep in an RV each night on the north end of the fairgrounds, and each day they need a ticket to go to work.

The price of a ticket varies, but we'll assume the fair draws 1.6 million and every one of those people buy the ticket for $9, the per-fair price. The fair would generate $14.4 million from those tickets.

Now add it all the revenue the fair gets from every vendor who hawks jewelry or Shamm-Wow. My bosses are one of hundreds of businesses that set up shot at the fair every year, paying plenty for the privilege to do so. They pay rent for their space in a crappy, hot building, but that doesn't include utility or trash service. They are charged an additional fee for how much electricity they require for the 12-day run. And they pay some sort of separate fee for garbage service, even though they generate very little trash. I'm sure there are other fees I'm unaware of.

Besides all the vendors hawking merchandise, there are tons of food booths at the fair. I have no idea how the economics of the food booths work, but I do know that the state fair gets a cut of food sales from many, if not all, of the food vendors. You want the privilege of selling hot dogs to the prisoners of the fair? You'd better be ready to pony up pennies from every dollar you take in. If you don't like it, somebody else will gladly replace you, I'm sure.

Yes, there are many costs associated with running a 12-day fair. There are hundreds of employees working each day, picking up garbage, offering directions to food booths and selling those $11 tickets to the unwashed masses on a Saturday morning. There are also plenty of police officers available each day, and they don't come cheap, I can assure you.

There are the costs of full-time, year-round employees, building maintenance and marketing, just to name a few other costs. It can't come cheap to run a massive 12-day event, but the organization is well funded, without question.

Does the state fair turn an annual profit? It's hard to look at all the money flowing through the gates every year and determine it doesn't. Yet there's a nonprofit foundation that claims money is needed for capital and program improvements. Sounds like a scam to me.

And on top of the tens of millions of dollars the fair takes in every year, there are a variety of events, big and small, taking place at the fairgrounds throughout the year. Hard to believe there's a financial need for program improvements.

I can't answer many of the questions I ask, but if you take a look at the big picture, you have to wonder what the hell is going on inside the prison walls.